Mexico's bold plan to decentralize industry taking shape

ByRalph Shaffer, Special to The Christian Science MonitorAugust 27, 1981

It may take a while, but Mexico's 1979 thrust to decentralize industry is shaping up. With over half of the country's production centered on Mexico City at the end of the 1970s, the area was choking. Twenty percent of the country's population lived in the area, and because of urban-related job prospects, more were coming all the time. the city's service pipelines -- supplies, transportation, finance , energy -- were clogging.

Under a bold, $25 billion program, the government pinpointed four new areas -- Altamira and Laguna del Ostion on the Gulf of Mexico, and Lazaro Cardenas, and Salina Cruz on the Pacific coast -- to be developed into oversize industrial parks with adjacent port facilities.

Besides creating a physical plan for establishing dispersed industry, the government offered incentives to draw new and existing companies to the sites. These included a 30 percent discount on electrical energy; certificates for up to 30 percent of investment, usable to pay taxes; 15 percent credit on purchase of certain Mexican equipment; and tax credits based on the number of jobs created. The incentive list, originally restricted by product category, as broadened to include companies making all types of products.

Heavy industry is planned for the new cities. Altamira is expected to have steel mills, a petrochemical complex, spinoff chemical producers, food processing, and warehousing. like all four new cities, it will be a complete entity with schools and hospitals, stores and shops. Because it is next to Tampico, with a population of 650,000 it is expected to swell the area's population to sereral million as it matures.

At Lazaro Cardenas, 140 miles north of Acapulco on the Pacific Ocean, the present steel mill is being expanded. Two joint ventures between Japanese firms and the State's development bank. Nacional Financiera, to manufacture outsize pipe and castings are taking shape; and a fertilizer plant is being built. Plans are going ahead, too, to bring the naval base and government shipping facilities from Acapulco to the new port when it is ready.

Salina Cruz, on the Gulf of Tehuantepec along Mexico's narrow southern neck, is being programmed to become the country's deepest harbor. Oceangoing terminals there will mkae it the country's main port for medium-size tankers. Backup for the port will be a petrochemical complex of Pemex, the state oil company.

For participation in the new industrial cities, Mexico's "tight door" foreign investment policy appears to have opened a little. Since 1973, newly established foreign companies have been allowed only minority ownership, with a mandatory 51 percent Mexican stake. this has not deterred foreign enterprise from setting up in the country, although not too much has yet gravitated to the four new areas.

But according to the Industry Ministry, there has been a strong influx of overall foreign projects. In 1980 the value of new foreign projects approved by the ministry was $1.6 billion. This compares with $810 million in 1979 and $385 .3 million in 1978.

Although figures on new tenants in the four cities are far from complete, government officials are looking toward the decentralization to develop new investment, new exports, and new jobs well before the year 2000.